Nano Dimension (NASDAQ:NNDM), an Israeli 3-D technology and nano-PCB technology company, recently raised almost $1.5 billion. As a result, it is now on the acquisition warpath, putting that capital to work. The money is burning a hole in its pocket. In the last month it has made two acquisitions, in cash and NNDM stock.
In my last article on the stock from February, I detailed how the company has raised $1.452 billion in the last six months. Interestingly, the company has not made any statements in its numerous press releases as to how much actual cash it has now. So it could be less than $1.45 billion.
In addition, the company has not yet confirmed how many shares it has outstanding right now. Nevertheless, Nano Dimension has started acquiring companies. When the company decides to publish its Q1 earnings, it will have to indicate the total cash on hand and its shares outstanding. But that could take up to another month or two.
On April 20, Nano Dimension agreed to buy Deep Cube, an artificial intelligence/machine learning/deep learnings (AI/ML/DL) technology company. The Israeli company manages “a neural network of edge devices, self-learning and self-improving their efficacy and self-managing and maximizing yield throughout the total network.”
Nano Dimension says its next-gen machines will also be edge devices, like the ones that Deep Cube manages. Given that Nano Dimension’s products are used in intelligent drones, cars, satellites, smartphones and in vivo medical devices, the application for Deep Cube technology could be extensive.
Interestingly, Nano Dimension made no statement about the revenues, earnings or even cash-burn rate at Deep Cube. We have no way of knowing if this is going to be a good investment or not. It agreed to pay $40 million in cash upfront, plus $30 million in NNDM stock (ADRs). The $30 million in shares are subject to stand-still agreements for up to three years.
Then, seven days later, on April 27, Nano Dimension agreed to buy another Israeli company called NanoFabrica. The company is a “world leader in technology and turn-key systems for precise 3D-micro-printing.” NanoFabrica specializes in precision digital manufacturing. This means “micron-resolution with ultra-fine features, details, accuracy and precision.”
Nano Dimension says NanoFabrica overlaps its clients in aerospace, aviation, high-end electronics and automotive, medical, optics, research, education and more. However, just like with the Deep Cube, Nano Dimension did not provide any financial information about NanoFabrica’s prospects.
However, it paid a lot of money for the company. NanoFabrica shareholders will receive between $23 and $27.5 million in cash, plus $32 million paid in NNDM stock (ADRs). There is also a lockup on 30% of those shares (about $10 million). So the total cost of the acquisition is as much as $62 million.
Where This Leaves NNDM Stock
So in the space of fewer than two weeks, Nano Dimension paid out up to $67.5 million in cash upfront, plus up to $62 million in shares of NNDM stock. So far, that does not really put a dent in the company’s $1.45 billion cash pile and its $2.05 billion market valuation.
However, as I pointed out in my previous article, I suspect that NNDM stock won’t abide by the lack of disclosure for much longer. Investors want to know clearly what the prospects are for both the company and its new acquisitions. In fact, it would be great to just have some actual clarity on the company’s cash situation, its burn rate, the balance sheets of the acquisitions it made and their burn rates.
Therefore, for all intents and purposes, it is impossible to put a value on the company other than its cash per share. In my previous article, I estimated it equals $5.94 per share (i.e., $1.452 billion divided by 244.44 million shares).
However, since the company just spent $67.5 million in cash, the net cash before cash burn is $1.3845 billion. That works out to $5.66 per share. This represents 71% of the stock price today, April 29, at $8 per share as of market open.
However, this is a highly speculative stock. A cautious investor would wait until NNDM stock falls to the level of its cash per share, $5.66, or 29% below today.
On the date of publication, Mark R. Hake did not hold a long or short position in any of the securities in this article.
Mark Hake writes about personal finance on mrhake.medium.com and runs the Total Yield Value Guide which you can review here.